The document discusses the challenges that organizations face with digital disruption. A survey found that while many clients are concerned about digital disruption, few are adequately prepared to address it. Embracing change and developing a digital business strategy is key to thriving during disruption. However, the survey found that developing new skills and updating outdated IT systems are major challenges for organizations. CIOs need to work closely with business leaders to define a vision for how digital disruption will impact the organization and identify ways to tackle challenges during the transition.

1. Digital disruption –
dive in to thrive
A recent global survey of KPMG International member firms’
advisors who work closely with end-user organizations found
that the majority of clients profiled are concerned about digital
disruption – but few are adequately prepared to address it.1
While digital disruption may threaten current businesses, it
also creates opportunities for those organizations that embrace
change. Organizations that do not dive in stand to lose, and will
find it ever more difficult to catch up as technology advances.
Understanding the impact that digital disruption will have
on a firm’s products services and business model is the first
step. Developing a digital business strategy, acquiring the
necessary digital skills, and getting the organization to buy
into the required changes represent the next steps. Additional
data from the survey reveals that this will not be easy.
Key findings from KPMG’s CIOAdvisory Survey
Just as Amazon changed how we buy things and
Netflix transformed how we consume videos,
companies like AirBnB and Uber have shaken up the
hotel and transportation industries. With new disruptive
technologies, products, services and business models
being introduced almost daily, CIOs need to take charge
of their organization’s response now to secure long-term
business success.
1
The CIO Advisory Pulse survey polled 118 KPMG advisors globally in all major markets.

2. CEOs and CIOs must take the reins
The majority of CIOs (58 percent) and almost half of the CEOs
(43 percent) are involved or very involved in their firm’s digital
business strategy, but only a small number are actively leading
the effort.This low rate of leadership is troubling. Given the
magnitude of the impact that digital disruption is likely to have
and the significant organizational change effort required for
transformation, the absence of strong executive leadership is
likely to present a greater risk to success.
Lack of critical skills and IT systems are big challenges
Responding to digital disruption involves mastering and
implementing new technologies that require new skills. Many of
these new skills are in short supply, and this will only get worse
as more organizations undertake digital business initiatives. A
strong majority of respondents cited a lack of critical skills and
the limitations of existing IT systems as their biggest challenges.
There are no easy or quick solutions to the challenges
created by digital disruption. However, without a clear
vision, it is impossible to tackle the other challenges. CIOs
should work with the business to define what ‘digital
disruption’ specifically means to the organization at all levels –
enumerating its threats and opportunities and identifying
ways to meet implementation challenges and requirements.
Once the vision is in place, a clearer picture of the required
skills and systems changes will become apparent.
(n=72) Major Challenge
What are the biggest challenges in responding to digital disruption?
Poor
understanding
of impact
Lack of
critical skills
Limitations of
IT systems
Cultural
resistance
Lack of
vision
No sense
of urgency
Funding Support
from IT
Support
from the
C-suite
65% 64% 56% 55% 52% 29% 25% 26% 19% 12%
Support
from
business
leaders
23%
35%
35%
Involved Very involved Leading it
If your client has a digital business strategy, how involved is the CIO and CEO in formulating and/or executing it?
18%
34% 25%
18%
5%CEO CIO 5% 3%
Not involved Somewhat involved
Source: KPMG Global CIO Advisory Pulse Survey 2014
Source: KPMG Global CIO Advisory Pulse Survey 2014
© 2014 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.

3. The information contained herein is of a general nature and is not intended to address the circumstances of any particular
individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such
information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on
such information without appropriate professional advice after a thorough examination of the particular situation.
© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of
independent firms are affiliated with KPMG International. KPMG International provides no client services. No member
firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does
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The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Designed by Evalueserve. Publication name: Digital disruption – dive in to thrive
Publication number: 131794 Publication date: November 2014
kpmg.com/socialmedia kpmg.com/app
Matt Bishop
Principal
Global CIOAdvisory Leader
KPMG in the US
T: 1-214-840-2749
E: mbishop@kpmg.com
Marc Snyder
Advisory Managing Director
CIOAdvisory
KPMG in the US
T: 1-978-807-0522
E: msnyder@kpmg.com
Contact us:
IT capabilities are weakest where
needed most
High on the CIOs’ agenda is acquiring new skills and
capabilities as well as improving the maturity and performance
of existing capabilities required for digital transformation.
Some of these improvements will come from developing
existing IT staff and recruiting internally from other
departments, but some will require acquiring capabilities
from external sources whether through direct hiring, or from
outsourcing/contractor relationships. Either way, this will be
challenging given that demand for these capabilities is very
high while the supply is thin.
Thriving amid disruption
What can organizations do?To help transform the enterprise
into an agile digital business, CIOs need to tackle three areas
in particular:
1. To optimize the value from their investments, clients need
to develop a digital business strategy at the enterprise
level with sub-strategies that account for varying needs
across business units, geographies, functional areas
and for different classes of employees, customers and
business partners.
2. By taking a more active role in defining and driving the
implementation of their digital business strategy, CIOs
can reduce risk and increase the likelihood of success.
3. CIOs need to shift from ‘big bang’ IT projects to the use
of agile development processes, which see IT and the
business working together on discrete digital initiatives
in an incubator or lab-type environment.This allows the
organization to move ideas from design to testing to reality
much more quickly.
CIOs’ unique vantage point gives them a window into the
technological and information needs of each part of the
organization. By combining this perspective with knowledge
of current and emerging technologies and a comprehensive
digital business strategy, CIOs can drive value for the
company and evolve their role from IT service provider to
digital business strategist.
High – Very High
In the context of digital initiatives how would you rate your client's
capabilities in the following areas? (n=76)
IT governance
23
%
16%
Mobile technologies
20
%
Sour
cing vendor managem
ent
14%
Cloud technologies
17%
Solut
ions development deli
very
12%
Big data/analytics
17%
Enterprise architecture
12%
Social media
Source: KPMG Global CIO Advisory Pulse Survey 2014